Gold Price Futures (GC) Technical Analysis – Closed Inside Key Retracement Zone at $1512.40 to $1526.40

Gold futures hit a three-month high on Tuesday before backing off into the close. Yesterday’s gains helped the precious metal post its biggest annual increase in nearly a decade in 2019. The catalysts behind the recent strength have been a weaker U.S. Dollar and strong speculative buying after gold broke out to the upside after sitting in a range for two-months.

On Tuesday, February Comex gold settled at $1523.10, up $4.50 or +0.30%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Tuesday when buyers took out the November 1 swing top at $1525.20.

The main trend will change to down on a trade through the December 9 swing bottom at $1463.00. This is highly unlikely over the near-term, however, due to the prolonged move up in price and time, the market is in the window of time for a closing price reversal top.

This higher-high, lower-close chart pattern won’t change the trend to down, but it could signal the start of a 2 to 3 day break or a 50% correction of the current upswing. In a strong bull market, it usually just means that the selling is greater than the buying at current price levels. It also often indicates that investors have grown tired of buying strength and want to play for a pullback into a value area.

The main range is $1571.70 to $1453.10. Its retracement zone at $1512.40 to $1526.40 is controlling the near-term direction of the market. The market closed inside this zone on Friday.

Daily Gann Angle Analysis

On the upside, the nearest downtrending Gann angle and potential resistance comes in at $1530.70. This angle may act as resistance on the initial test, but it’s also a potential trigger point for an acceleration to the upside with the next target angle coming in at $1551.20.

On the downside, the nearest support angle is at $1519.10. This angle is moving up at a rate of $2.00 per session. A sustained move under this angle could trigger the start of a steep sell-off since the next target angle doesn’t come in until $1486.10.

Short-Term Outlook

Essentially, the next major move by the February Comex gold futures contract will be determined by trader reaction to the Fibonacci level at $1526.40 and the 50% level at $1512.40.

The developing upside bias should strengthen on a prolonged move over $1526.40. However, a sustained move under $1512.40 will signal the return of sellers.